Affiliation:
1. University of Mannheim, Germany
2. European University Institute, Italy
Abstract
Abstract
This paper studies the determination of income taxes in a dynamic setting with human capital accumulation. The goal is to understand the factors that support an outcome without complete redistribution, given a majority of relatively poor agents and the inability to commit to future taxes. All agents agree ex ante that limiting tax and transfers is beneficial but a majority favours large redistribution, ex post, at the time of the vote. In a political influence game, group activism limits the support for expropriatory taxation and preserves incentives. In some cases, the outcome corresponds to the optimal allocation under commitment.
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics
Reference40 articles.
1. Dynamic Mirrlees taxation under political economy constraints;Acemoglu;The Review of Economic Studies,2010
2. Fairness and redistribution;Alesina;American Economic Review,2005
3. Preferences for redistribution in the land of opportunities;Alesina;Journal of Public Economics,2005
4. Goodbye Lenin (or not?): The effect of communism on people’s preferences;Alesina;American Economic Review,2007
5. Preferences for redistribution;Alesina,2011